St James’s Place fees raise doubts over transparency

When changes were introduced to fees and commissions in January 2013 consumers hoped they would clarify the cost of getting financial advice.

But it would seem that it depends from whom you get the advice.

One of the requirements of the retail distribution review was for financial advisers to inform clients how much they would pay for financial advice. This was clarified by the Financial Conduct Authority (FCA), which regulates financial services, to mean in both pound notes as well as percentages so that there would be no misunderstanding.

It may come as a surprise then to read at the weekend how it proved difficult to get a clear answer to the question from St James’s Place (SJP).

One client told a Sunday newspaper that he used Hargreaves Lansdown and SJP and while both are reputable organisations “Hargreaves Lansdown’s fee structure is very transparent, while SJP’s is anything but…”

He went on to say that whenever he asked about its fees he didn’t get simple answers, as its fees are incorporated in its unit cost pricing structure.

Another said he recently tried to get to the bottom of the fees and charges levied by each of the four advisers, and “only SJP has been difficult.”

Certainly SJP score highly for customer satisfaction – 98% of its customers would recommend the firm based on a recent survey.

But when asked about its charging, it replied that its clients simply want to have one charge which covers advice and fund management, saying: “If you go to John Lewis and buy a television or a computer, you don’t ask for the breakdown of the costs to find out what the margin is that John Lewis makes versus the manufacturing costs and everything else.”

This seems at odds with what is required of other advisers.

The FCA rules on communications to clients are that they should be “clear, fair and not misleading” so it is surprising to find investors who are able to understand the charges breakdown from other advisers but not from SJP.

The confusion that seems to surround SJP’s charges will no doubt be a concern for its chief executive, David Bellamy, as he sits on the FCA Practitioner Panel.

One wonders if he will campaign for all advisers to offer the “one charge solution” that SJP believe clients really want.